crisis management - planning and action
Contingency planning
Organisations prepare contingency plans in recognition of the fact that things do go wrong from time to time
Contingency planning involves:
- Preparing for predictable and quantifiable crises
- Preparing for unexpected and unwelcome events
The aim is to minimise the impact of a foreseeable event and to plan for how the organisation will resume normal operations after the crisis
Contingency plans
The contingency plan:
- Identifies alternative courses of action that can be taken if circumstances change with time
- Details standby procedures to enable the continuation of essential activities and services during the period of the emergency
- Includes programmes for improving the business in the longer term once the immediate situation has been resolved
Steps in drawing up a contingency plan
- Recognise the need for contingency planning
- Identify possible contingencies - all the possible adverse and crisis scenarios
- Specify the likely consequences
- Assess of the degree of risk to each eventuality
- Determine risk strategy to prevent a crisis & to deal with a crisis should one occur
- Draft the plan and identify responsibilities
- Simulate crises and the operate of each plan
Dealing with the “what if” question
Scenario analysis:
- This involves constructing multiple but equally plausible views of the future
- The scenario consists of a “story” from which managers can plan
Sensitivity analysis
- Involves testing the effect of a plan on alternative values of key variables
- e.g. the effect of a 50% loss of capacity
Crisis management
- Crisis management involves:
- Identifying a crisis
- Planning a response
- Responding to a sudden event that poses a significant threat to the firm
- Limiting the damage
- Selecting an individual and team to deal with the crisis
- Resolving a crisis
Stages of a crisis
Pre-crisis |
Prior to the event |
Warning |
Indications that there is or may be or could be an event liable to cause a significant impact on the organisation |
Crisis point |
When the event begins to cause significant impact on the organisation |
Recovery |
The acute stage of crisis has passed and the organisation is able to focus on a return to normal operations |
Post crisis |
Evaluation of the effects |
Role of the crisis manager
- Crisis assessment
- Event tracking
- Managing human considerations
- Damage assessment
- Assessment or resources and options
- Development of contingencies
- Managing communications
- Co-ordination with external bodies
- Controlling information
- Controlling expectations
- Managing legal requirements
Advice on handling a crisis
- Appoint a crisis manager
- Recognise that the crisis manager is likely to adopt a more authoritarian style than is normal
- Do an objective assessment of the cause (s) of the crisis
- Determine whether the cause (s) will have a long term effect or whether it will be a short term phenomenon
- Project the most likely cause of events
- Focus on activities that will mitigate or eliminate the problem
- “Look for the silver lining”- opportunities in the aftermath
- Act to guard cash flow
Dealing with the financial aspects of a crisis
- Accelerate accounts receivable (payment by debtor)- by offering a discount if necessary.
- Slow up payment to creditors where possible.
- Increase short term, sales
- Reduces expenses - especially “non mission critical” expenses
- Outsource non mission critical operations.
- Re-schedule loans
Dealing with the “people” aspects of a crisis
- Form a crisis team
- Designate one person only to speak about the crisis to the outside world
- Act to prevent or counter the spread of negative information
- Make use of the media to provide a counter argument
- Do not tell untruths - trying to manipulate or distort the information will backfire
tutor2u is the leading global publisher of e-learning resources for Economics, Business, Politics, Enterprise, Law, Sociology, Religious Studies and related subjects. Our materials are used by over 3,500 schools and colleges in the UK and in educational institutions in over 85 other countries. tutor2u offers a range of free and subscription-based materials - designed to support teachers and inspire students. The business also runs a popular series of student revision workshops and teacher conferences. tutor2u was named Online Learning Resource of the Year at the prestigious BETT Show - the World's leading educational show.
|
Privacy & terms of Use |
Contact us |
Teacher Newsletters & Subject Blogs |
